The Federal Trade Commission (FTC) is determined to stop timeshare resale fraud and to protect financially desperate owners. "Con artists take advantage of timeshare owners who have been in tough financial straits and are desperate to sell their timeshares," said Charles A. Harwood, Acting Director of the FTC’s Bureau of Consumer Protection, at a recent press conference. "They persuade owners to pay fat up-front fees by saying they have someone ready to buy the property, but that’s a lie." The FTC wants scammers to know that law enforcement agencies at every level of government are working together to put an end to this problem. The agency’s efforts with partners from federal, state, and international law enforcement, includes 191 actions against companies scamming travelers and timeshare property owners. The widespread effort includes 3 FTC cases, 83 civil actions brought by 28 states, and 25 actions by law enforcement agencies in 10 other countries. Over 184 people face criminal prosecution.

Typical Timeshare Resale Scam

According to the FTC, the typical timeshare resale scam starts with a phone call. “A timeshare property owner gets a phone call from a reseller with an offer to sell a vacation property to a waiting buyer. The timeshare owner is asked to sign a contract and pay a transaction fee--usually with a credit or debit card--before the alleged sale can proceed. But after the contract is signed and the fee collected, the timeshare owner is rarely contacted again by the reseller.” In most cases, the buyer never existed, and the contract was only for advertising services. When the timeshare owner realizes this and calls to get the fee refunded, the scammer ignores the phone calls, or denies any refund requests, or stalls to go beyond chargeback timeframes, and may even try to evade charges by moving to another city or state and reopening under a new name.

Double Scamming

The FTC has also come across scammers that are trying to take advantage of the owners that have already been scammed by a resale fraud. These rip-off artists claim they are associated with the federal courts, the U.S. Department of Justice and the FTC. They tell the already victimized owners that the FTC has brought cases against the fraudulent resellers and the owner is entitled to a refund as part of the case. If owners give them several hundred dollars for court costs, processing fees or filing fees, the scammers claim they will help owners get the refunds owed to them. Some scammers have used an actual FTC case number and posed as attorneys to help convince unwary owners.

FTC’s 5 tips to Avoid Resale Scams:

Check out the company before you agree to pay any money.

Deal only with licensed real estate brokers and agents.

Get all terms in writing before you agree to anything.

Consider doing business only with a company that gets paid after the timeshare is sold.

Be alert to repeat scams.

ARDA Also Protects Timeshare Owners

The FTC is not the only entity policing the timeshare industry. The American Resort Development Association (ARDA), the voice of the timeshare industry, has developed ten advisories to help timeshare owners avoid scams and enjoy a safe and positive selling experience. These advisories (listed on the ARDA website) help guide consumers and owners through the secondary market that includes timeshare resellers, internet advertisers and resale companies.ARDA has also joined forces with the FTC. Says President and CEO of ARDA, Howard Nusbaum, “We have worked closely with the Federal Trade Commission (FTC) and many states to educate consumers about scams in the secondary market. We encourage anyone trying to sell their timeshare to take the time to understand their options and to use the resources available to them.”

The latest effort by ARDA to help owners and consumers understand the options and resources available, is an easy-to-follow Infographic (available at www.ARDA.org) that illustrates steps “to avoid the wild-west environment of the crowded resale marketplace.”